Chapter 10

Current portion of Long-Term Debt reports the amount of _______________________ and is reported on the _____________________

long-term debt that is reclassified because it is due within the year; balance sheet

A bond with an issue price of $10,100 and a face value of $10,000 was issued at

101.000

If a business is operating in a state with sales tax, and they record a cash sale...

Assets will increase, SE will increase, Liabilities will increase

The stated rate is the rate used to determine the ______________

interest payment

When a company records a debit to Bonds Payable and a credit to Cash, it is the bonds'

maturity date

The stated rate...

stays the same throughout the life of the bonds

T/F: A classified balance sheet separates liabilities into current and non-current categories

true

T/F: Companies issue bonds at a discount when the bond's stated interest rate is lower than the market interest rate

true

US corporations pay federal taxes on...

payroll and income

Bonds that are backed by collateral are _______________________

secured

ABC, Inc. issued $100,000 of 10%, 5-year bonds on January 1st for $92,280. Interest is paid annually on December 31st. When ABC records the first interest payment, which will be greater - the debit to Interest Expense or the credit to Cash?

the debit to Interest Expense will be greater because the market rate is greater than the stated interest rate

On September 1, ABC Company borrowed $50,000 on a 6%, 9-month note payable to XYZ National Bank. Given no previous adjusting entries have been recorded, ABC's adjusting entry at December 31 would include a...

$1,000 debit to Interest Expense ($50,000 x 0.06 x 4/12)

Gross earnings for the pay period are $100,000. Required payroll deductions are: Social Security $6,700; Medicare $1,450; Federal Income tax $18,000 and State income tax $3,850. What is the net pay to employees?

$70,000 ($100,000 - $6,700 - $1,450 - $18,000 - $3,850 = $70,000)

The law requires ____________________ to pay FICA taxes.

both employee and employer

The entry to record the employer's obligation for FICA and state unemployment taxes includes a...

credit to FICA payable, credit Unemployment Tax Payable, and a debit to Payroll Tax Expense

Accounts (or trades) Payable is a ___________________ which ____________ when purchases are made on credit and ____________ when bills are paid

current liability; increases; decreases

Payroll deductions...

decrease the amount of cash an employee receives and are subtracted from employees' gross earnings to determine their net pay

A liability is first recorded at the amount of cash a creditor would accept to immediately settle a liability, which _______________ interest

excludes

As of December 31st, $110 of interest had been accrued and recorded on a 12%, 1-year, $1,000 note payable. On January 31 of the following year, the entry to record the payment of the note's principal and interest requires...

$110 debit to Interest Payable, $10 debit to Interest Expense, $1,000 debit to Notes Payable, and a $1,120 credit to Cash.

The issue price of 1,000, 5%, $1,000 bonds issued at 100.00 equals _________________

$1,000,000 (1,000 x $1,000 x 100%)

If ABC Company receives $100,000 cash in exchange for issuing 100 bonds at their $1,000 face value, the transaction will be recorded as a debit to...

Cash and a credit to Bonds Payable of $100,000

The journal entry to record the payment of salaries and wages to employees includes ...

a credit to cash, credit to FICA Payable, credit to Withheld Income Tax Payable, debit to Salaries and Wages Expense,

What kind of account is Deferred Revenue?

a liability account

Notes Payable

a liability that represents the amount that the company owes to others as a result of issuing a promissory note

Which payroll taxes are paid ONLY by the employer?

SUTA and FUTA

Gross earnings for the pay period are $100,000 and net pay is $70,000. The journal entry to record the wages paid will include...

a $70,000 debit to Salaries and Wages Expense

Assuming an employee gets paid in cash and payroll deductions are going to be paid the following month, how would ABC record the payroll deductions?

an increase to current liabilities

From the issuing company's perspective, a bond is a liability. From a bondholder's perspective, the bond is an...

asset

A company recorded the issuance of its bonds with a debit to Cash for $107,260, and a credit to Bonds Payable for $100,000 and a credit to Premium ...

on Bonds Payable for $7,260

Long term liabilities are on the books for more than _____________

one year